Hey Im new to this whole silver thing..

Hey Ive very very recently been introduced to silver and I have just a few questions. I see that the price of silver bullion on Monex is 17.08 dollars per ounce and American Silver Eagles are 19.49 per ounce. Why is that? When the price of silver bullion goes up does the Silver eagles prices go up accordingly? How can I make a profit off silver whenever the people Im buying the silver from are trying to make a profit off me? Thanks and sorry for all the questions just trying to learn

 

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Silver Eagles usually do carry a premium over spot price. The price you mentioned is pretty much in line with the prices I have been seeing. And yes, the Silver Eagle prices usually do change with the price of the metal. As for making a profit, of course the people selling them will be trying to make a profit off of you. Thats what they are in business for. To earn money. If you're looking for a quick profit, you may be looking in the wrong direction, unless you are lucky enough to buy a large amount of silver right before it takes a big jump in price. Most people are buying silver as a hedge against inflation, or just because they like it. Not to turn around and sell it for a profit.

 

Im not necessarily looking for a quick profit. I see that the price of silver last year at this time was around 12 per ounce. If I was to buy 50 oz of silver at that point in time ( Ill add a dollar per oz. because of businesses trying to make a profit ) It would cost me $650. Then If the prices went back up to 17 per oz. the silver would be worth $850. Thats $200. Im not looking to buy silver then sell it a week later.

 

The premium back then were about $4 an ounce. So, if you bought back in february of last year, when the price of Silver was $13 an ounce, you were paying $17 an ounce to get any.

Silver isn't for a fast buck. If you want that, invest in a bank share that pays dividens. Just don't come crying when the bank share fails. Most people on here invest in Silver as a means to protect their wealth, not a make a fast buck.

 

The silver spot price is for 1000 ounce bars. It costs money to make them into smaller units like Eagles, rounds, bars, etc. That is where the initial premium comes from.

Buy at a premium, and sell at a premium.

 

Ok, I see what you are saying. Its all speculative though. Your guess is probably as good as most other people's as to where prices are going and what will be a good investment over a certain period of time. If you're in it for the long haul you can't really go wrong with silver in my humble opinion.

 

Maybe. The premium the coin commands over wholesale price can go up and down. If you buy when there's a sudden demand for physical silver, you might pay more premium than average: if you then sell when conditions are more normal, the premium will have dropped.

You do get something for that premium. You can sell to a wider audience.

Oh, and the answer to "how do I profit" includes "minimize expenses". Buying and selling physical metal costs more than buying and selling ETFs or BullionVault deposits.

 

First welcome!!!

Second that is a strange (to me) question,

""How can I make a profit off silver whenever the people Im buying the silver from are trying to make a profit off me""?

You most likely cannot make a profit on silver only starting out and no matter what you buy or sell each party tries to make a profit at each step of the way. I mean I expect anyone I'm buying something from to make a profit. It may just be the way you said that it was not thought out well.

Silver Eagles alway carry a premieum even when ordered in monster boxes there is a charge of $1 to $2 over spot for them plus shipping. Dealers in recent times are in these deep to say the least. Even when we were buying and selling them for $135 a roll (and it was not that long ago) there is the same type markup over spot for each coin.
Today dealers must charge $20 to $22 retail for each coin and even then they are not making very much at all. If they make $2 per coin on a roll what is that, $20 dollars per roll. That's chump change compared to profit on most coins.

You probably need to just learn and study a great deal first and after some time you may be able to "make that profit" you want. It is very competitive area of coin dealing though and the margins are very thin even in the best of times. I actually find it quite boring to work on such slim margins but each to thier own.
I've been in this quite awhile though and I don't "get" the silver or gold market. Most of it's reasons are still a mystery to me.

Good luck!

 

Welcolm to CoinTalk. ASEs are a good choice for silver investment. They carry a premium when you buy them, and should sell for at least a small premium over spot when you sell them. They are beautiful coins, have a small numismatic premium [which may grow over time] and are probably the most liquid of all silver coins. It isn't as important to buy at a low premium as it is to buy at al low price, so don't get hung-up on the premium. If the spot price is $12 and you buy at $15, that is a better buy than if the spot price is $18 and you buy at $19. Most people here probably expect silver prices to be much higher in a few years than they are now, I being one of them. Personally, I think any price below $20 will turn out to be a bargain.

 

Howdy and welcome,

I concur with everyone.

You can buy silver bullion in either coins or ingots. Ingots (plain vanilla silver bars or rounds) generally have the lowest premium while of the coins are higher and the ASEs the highest. This is because they're U.S. and also easiest to sell. A very cheap way of buying silver bullion is with 90% U.S. circulated coins from 1964 and earlier.

The premium, or vigorish, is the market up by the dealers over the Spot price. Think of it like the used car market with wholesale and retail with the spread being the markup. This does make it hard for little guys to make a buck unless investing over a longer period of time.

You can buy 90% silver coinage as mentioned, and you can also get discounts for volume purchases. It would be a small per ounce premium if you bought a 500 oz ingot from BillyBob's Mint and Bait Shop - but it might be harder to sell some time in the future. Howver, if you buy a monster box of 500 2010 silver eagles, it may cost you more, but you can sell it easily and probably even for a small premium over spot.

Top shelf booze costs more and so do American Silver Eagles. You can by rotgut but we might not want to drink with you. Or you can buy it by the truck load and get a discount.

peace,

rono

 

One important thing in addition:
I'm at shops several times a week and shows once a month and talk with dealers and experts each day.
The amount of return on ASE verses 90% or .925 is not in the same ball park. Junk silver always makes more money across the board no matter what. No dealer I know of sells ASE and makes anything compared to junk silver. On average I would say that junk makes dealers here 4 times as much profit as ASE.
If you want to know the reasons why just say so and I'll give you my opinion on many finer points of this issue.

 

Please do!

 

First buyers and sellers of silver eagles are in bulk dealers and whoesale/retail operations. They buy sell this product based on supply and demand for customers. Tighter, tighter critiera based on on a limited supply of one type product. It's only been made since 1986 and is after all only in one form.

Buyers and sellers of .900 or .925 and other content silver get it from everywhere and everybody.
Mom and Pops, estates, auctions, walk ins, jewlery, industrial, world coins and since time began or at least a few thousand years.
Within those buying oppertunities are vast ways and means to get it cheaper, more often, with less overhead and more simply.
Most dealers I know have boxes of the stuff just waiting for the smelter to come by. Even many modern proof silver coins and commemortives are thrown in there because they are worth so little compared to thier silver content. .925 is always bought at about 85% of .900 because of concerns of finness costs and of refinery thus somebody somewhere gets more silver than they paid for.

There is simply more junk silver by 100,000 than is in ASE to begin with and the buying oppertunities (right or wrong) or all over the board letting people more often cash in on lower buy prices.

 

Hey thanks everyone for all the Information/Tips this has been very helpful

 

Thanks! I'm glad that there is still plenty of the 90% around. I hate to hear people tell me that they are melting it down. It's a great way to acquire coins whose silver content is .gov guaranteed, and personally, I enjoy my 90% silver more than my modern .999 coins which I am afraid to even breathe on...

 

There's not only plenty of it - it will never be all turned in or even partly used up. It is in no farthest stretch of the imagination rare.
Think about it this way.

This town is about 450,000 people, there is three coin shops, 100 pawn shops, gold and silver buyng shops and a monthy coin show that has ran for 28 years. All of these places stay in buisness and have multible pounds each of silver and gold at any time in 90%. The bigger show dealers (about 10) always have a couple of $1000 bags of silver 90%. Each one has rolls, say, 4 or 5 dozen of silver eagles and 100 oz. bars also. The shops get in about $1000 a week in silver 90% - I have no idea what the pawn shops do but know they buy and sell silver and gold like everyone else. I havn't even included the jewlery stores. I didn't even include commemoritives or rounds or industrial silver, (Remember we have Oak Ridge next door!)
Each week or month this silver comes in from collectors, mom and pops, and other dealers. People buy and sell it hoard it, melt it, save it, turn it in.
Now, I have not included yet the 10% or 20% of the population that still has this stuff in the basement, garage, lock box, safe on so on.
Also it is being melted everday and some is made everyday also of course plus it's been continually melted since 1964, over 46 years! Now much is just moved from place to place it is true but,,,

This is one little town, in one little state, in one little country!

Now how much do you think there is out there????

 

True, there is a lot of 90% silver coins out there....but as an example otherwise....I started to buy 90% silver in December of 2008. At that time, it wasn't easy finding any dealer willing to sell it, as the price was too cheap. Then around February of 2009, I was able to score a lot of 90% silver, but the premiums were outrageous. I ended up buying it for approximately $17 an ounce, even though spot price was about $13.50. Then the price did a dip in July. I went to my usual dealer, and he was completely out of junk silver, again.....or was he just saying. I had to drive 15 miles to another dealer that offered a good price....again about $17 an ounce, even though spot price was around $14.50. Last January, the price dipped again to $15.50 an ounce, I stopped by my usual dealer and he wanted $7.25 for a Franklin half dollar. I wasn't about to pay that, so I called the dealer 15 miles away and asked him to put together $40 face, which he charged me $12 on the dollar. While paying for my $40 face, this other dealer told me he was out of junk silver and not to call back for a while till he got more. So, while the amount of junk silver is great....finding it for a decent price might not always be.

 

That's about a 25% premium for silver which bhp3rd tells us is almost as common as dirt :bigeyes:. It's fascinating that I hear these stories about there not being any metal around every time the price drops, right about the same time that the Internet fills up with stories about impending "silver shortages" and "disconnects between the paper and physical market". If somebody doesn't want to sell at that price, fine with me, but making up tinfoil about silver shortages is silly. PMs sometimes seems like the only business where supply and demand is irrelevant, and where the price dropping means that there is "less" of something rather than more of it :rolling:. I've been buying silver since I was a kid, there has always been plenty of it around in the real world.

Next time you run into a shortage you might want to talk to Franklin Sanders the Moneychanger who is a big fan of silver. A friend of mine buys and sells 90% with him, he buys back 90% at spot, and his premiums are reasonable, but the shipping might kill you on small amounts.
..

 

I think if you discount the potential for a silver shortage as "tinfoil," you may miss the big picture. There is plenty of silver around if you are an individual collector looking to purchase a couple thousand ounces worth. Things are a bit different if you are an industrial user or ETF and want to take possession of ten million ounces worth of good delivery bars from a Comex warehouse. I believe that in London a few months back they even had a technical default on some contracts and forced buyers to accept cash instead of silver. This might be fine if you are an individual investor, but things are different if the silver was needed to keep the production line moving. The disconnect between the paper and physical price of silver is something worth watching in my opinion.

 

Just as a bit of history if you will I looked it up regarding mass quanities of silver that have been used.
Oak Ridge borrowed 15,000 tons, or 30 million pounds of silver from the fed, (yes those number are correct) to make wire during the WWII because of the shortage of copper.
It says all was returned to the fed afterwards and I'm certain it was, (when pigs fly)!
Just a bit of trivia, article below.

Silver Crucial For WWII Bomb

January 13, 2010 By Phillip F. Schewe, ISNS Enlarge
ALPHA-1 race track was part of the Y-12 plant in Oak Ridge, Tennessee. In it, process tanks with calutron units alternate with magnetic windings made of silver. Electrical-equipment cubicles with control panels are in a separate bay. Vacuum pumps are on a lower level. Credit: Courtesy AIP Emilio Segre Visual Archives, Physics Today Collection
In the middle of World War II, Secretary of War Henry Stimson asked Treasury Secretary Henry Morgenthau if he could borrow some of the government's silver on repository in West Point, N.Y. With metal in high demand for weaponry, silver was needed for a top-secret project. In this case it was silver's electrical properties, not its monetary value which made it important. The secret project was being carried out at several undisclosed locations and required immense resources.
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Silver was usually handled in amounts measured in ounces, but this time the Army was asking for tons. So great were the Army's requirements that almost 15,000 tons of silver -- 30 million pounds -- were withdrawn from federal vaults over two years, taken to a factory in New Jersey, and formed into coils of wire. Shipped to Wisconsin in train cars watched over by armed guards, the coils were fashioned into magnets. The magnets in turn went back east to Oak Ridge, Tennessee where they were put into action.
At Oak Ridge huge currents of electricity flowed through the coils, producing potent magnetic fields used to separate different types of uranium. Only uranium-235 atoms, slightly lighter than the more prevalent uranium-238, could blow apart in the kind of chain-reaction explosion that occurs in an atom bomb. The enriched U-235, obtained using the silver magnets in a painstakingly slow process, eventually found its way into the bomb that destroyed Hiroshima.
Cameron Reed, a physics professor at Alma College in Michigan, looked at government microfilms obtained from the National Archives to trace the odyssey of the silver from New York to Oak Ridge. Reed said that if all the silver borrowed by the Army were made into a cube, the dimension of each side would be 35 feet.
Although it took many years, all the silver was returned to the Treasury. General Leslie Groves, the head of the Manhattan Project which built the first nuclear weapons, was so scrupulous about returning the silver to the Treasury. He insisted that everything that had come in contact with the silver be scrubbed so that no shavings were lost. When in 1970 the final bars of silver were returned by federal nuclear officials, only about four-hundredths of one percent could not be accounted for.
In addition to the great effort required to ship and machine the silver, it took prodigious amounts of electricity to refine the uranium, said Reed. "The electrical energy run through the magnet coils to separate U-235 for the Hiroshima bomb was equivalent to about 1400 kilotons of TNT --about 100 times the energy released by the bomb itself."


(c) 2010 Inside Science News Service